For six weeks, Bitcoin lost the battle against gold. That streak has now been reversed – and has held for two weeks in a row, with Bitcoin rising more than 4% against the precious metal this week alone.
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The timing of that recovery is striking, as both assets are currently deep in correction territory. Bitcoin fell from a weekly high of $76,000 to less than $70,000, a decline of about 8.7%.
Gold fared no better, falling 8.5% over the same period, sending its price down to around $4,616 per ounce – well below the psychological $5,000 mark. Gold has now posted two straight weeks of losses and is heading for a third, its worst streak since last November.
The back-to-back sell-offs have revived a long-running argument in crypto circles: If gold falls, will the money eventually find its way into Bitcoin?
Benjamin Cowen, CEO of Into The Cryptoverse, says no. He has held this view since at least late January, when gold was still high and crypto bulls were banking on a rotational trade. Then he didn’t buy it. He still doesn’t.
Cowen’s case and what it is based on
Van Cowen reasoning is based on something that was already happening within the crypto market. When Bitcoin rose in previous cycles, many traders expected capital to eventually shift from BTC to smaller altcoins, leading to what the market calls “altcoin season.”
According to Cowen, that rotation never really came about in a meaningful way. He sees the gold-to-Bitcoin story following the same pattern.
On January 28, as gold was trading near an all-time high of $5,597 – a level it reached on January 29 – Cowen publicly posted that no rotation from metals to crypto should be expected.
One day after that message, gold fell by 4% and Bitcoin by the same amount, almost to the dollar. This co-movement attracted attention at the time. This week’s events have brought the argument back to the surface.
Not everyone agrees with him. Part of the market has long argued that precious metals and crypto serve different investor profiles, and that a pullback in one profile naturally sends money to the other. So far this cycle, the data has not shown this.
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The BTC/Gold ratio tells a different story
What complicates the ‘no rotation’ argument is the BTC/gold ratio yourself. Even as both assets fall in dollar terms, Bitcoin has gained ground against gold after hitting a low of nearly 12 ounces of gold per BTC earlier this month.
It has since climbed back to about 15 ounces. That figure is still well below the middle Bollinger Band at 18 and well below the upper band at 26, but the direction has changed.
Featured image from Unsplash, chart from TradingView